Rising rents and mortgage costs are putting many people’s retirement plans under pressure, as new data from the English Housing Survey reveals.

Renters report spending a higher proportion of their disposable income on rent (21%) than mortgage holders on their mortgage (16%). And while older people are more likely to own their homes outright, the English Housing Survey shows over a quarter (25.5%) of all social renters are retired along with 6.8% of all private renters.

The data also shows 7% of owner occupiers aged 65-74 are still repaying a mortgage along with 2.3% of those aged over 75. This figure may well increase in the future if those heading into retirement elect to extend their mortage period in order to make payments more affordable.

Paying rent or a mortgage in retirement

Moreover, while mortgage holders can envision a time when the loan will be repaid, and they can free up the extra cash for other things, for those who rent the obligation is never ending and a significant proportion (25.5%) of all social renters and almost 7% of private renters are retired.

Housing costs can have a significant effect on how much we can save for our retirement and once in retirement they can take up an enormous chunk of our income. However, they often aren’t factored into our retirement plans – for instance, the PLSA’s retirement income standards are modelled on the basis that the mortgage has been repaid.

Including housing costs in your retirement plans

Paying housing costs into retirement has an enormous impact on how much we need to save. Helen Morrissey, head of retirement analysis at Hargreaves Lansdown: “The dream of entering retirement mortgage free remains intact for many but for those who got on the property market late, or not at all, housing costs remain a huge burden.

“There are still significant numbers of (older) households who face having to find a significant chunk of change every month to repay their mortgage.”

The reality is that if you are paying housing costs in retirement the amount you need to allow for is much higher. In the current times these issues are particularly acute as mortgage rates and rents continue to surge.”

Morrisey added: “Recent government data indicated people who retired during the pandemic were considering a return to the workforce: we could see a growing number of them deciding to put their retirement dreams on ice in a bid to make ends meet.”

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